Luxembourg’s housing market sees slowdown in early 2025

Activity in the Luxembourg housing market experienced a slowdown during the first quarter of 2025, according to the latest report by Statec and the Observatoire de l’Habitat published on Thursday.

The cooldown follows a surge in transactions at the end of 2024, largely driven by buyers who rushed to close deals ahead of the anticipated expiry of tax incentives on 1 January, the report indicated.

However, since these measures were eventually extended until 30 June, there could be a possible rebound in the second quarter, with buyers looking to finalise purchases before the new deadline.

Apartment sales drop sharply

There was a 34.6% decline in the sale of apartments compared to Q4 2024, dropping to 1,135 transactions and far below the average of 1,654 per quarter seen between 2017 and 2021.

However, compared to Q1 2024, transactions were up by 25.4%, suggesting a year-on-year recovery.

Existing apartment sales were down by 34.1% from the previous quarter, while the sale of new-builds (widely known as ‘Vefa’) fell by 36.1%.

Compared to a year earlier, however, transactions for new-builds were up 163.5% year-on-year, rebounding from record-low levels seen at the start of 2024.

House sales also showed similar trends: transactions were down 35.5% from Q4 2024, but were 28.8% higher than in Q1 2024.

Prices hold steady

Overall housing prices remained stable, according to Statec’s price index, up 0.9% year-on-year but 1.2% lower than Q4 2024.

The price of new-build apartments stayed flat, up just 0.1% year-over-year, despite a slight quarterly decrease.

Accounting for inflation – which eased after mid-2023 – housing prices across all types of property were essentially unchanged, up 1.6% when adjusted in line with inflation, marking a break from the steep declines seen last year.

In the rental market, the first quarter of 2025 saw apartment rents in Luxembourg increase by 1.5% year-on-year but decrease by 0.8% quarter on quarter.

Advertised house rents rose by 12.2% year on year and 1.2% on the quarter, although this indicator makes up only up to 13% of the listings.

Furnished room rents, representing 18% of total listings, increased by 2.2% year on year. Meanwhile, rents on existing leases rose by 1.7% over the year, according to the statistics.